- OVERVIEW
High quality education remains main requirement for future growth of national economies. Good education programs lead to better labour productivity causing economic efficiency and productivity. Studies show that teachers in Vietnam are often underpaid and overwhelmed. Furthermore, newly graduated students often do not have enough relevant skills for practicing due to the lack of opportunity for taking a practice related part time job.
The need of a good education system is connected to many factors in Vietnam. One major impact is the improvement of Vietnamese workforce productivity. Furthermore, the workforce market is getting more competitive in domestic and international terms connected with a better international integration. Moreover, high quality education programs will decrease students’ decisions to study abroad easing the risk of losing intelligent workforce.
Therefore, there is a big potential for investments in the education sector in terms of establishing institutions with high quality education programs. Vietnam needs more workforce capable of doing management jobs in an efficient and successful way, thus, training programs are needed. The education programs often lack of focus on needs of industry where most post-graduated people are going to work in future. Moreover, there is a need on creating a better environment for educational institutions and for attracting more foreign institutions to establish programs in Vietnam.
- REPLACEMENT OF DECREE 73
There is new potential for successful investments in the education sector in Vietnam due to the new draft decree replacing Decree 73 issued in 2012. It is changing investment conditions and accelerating procedures boosting competitiveness in the sector and support for attracting new foreign investments. The following measures are only a couple among others provided in the new draft Decree. They simplify the process of establishing institutions as well as making investments in the education sector more attractive due to lower costs and easier logistics.
Firstly, for establishment of short-term trainings centers investors only need two licenses from now on, as well as the application process for issuance of licenses is simplified. Furthermore, the establishment does not require the construction of an own campus with long-term lease anymore. In addition, the conditions for admission of Vietnamese students to international schools in Vietnam is reduced giving possibility to investors on attracting more students to their established institution.
However, for implementation of the changes will be a big challenge but will also set milestone showing the government’s desire to develop the education system.
- TVET AND RELATED ISSUES
The Vietnamese government just recognized the importance of involvement of the private sector for development of the education system.
The government aims to develop the vocational skills training. Therefore, the government is promoting the expansion of the Technical and Vocational Education and Training (TVET) raising more resources for TVET processes. On the other hand, more resources will improve the quality of TVET’s programs.
However, there remain certain issues leading to insufficient attraction of investments from the private sector. There is big potential for both, foreign investors and the TVET but processes have to be more efficient and be focused on economic needs. Therefore, collaborations between companies and the educational institutions could be a key aspect to improve training of students to support the development of a high quality workforce in Vietnam.
- COMPETENCY SHIFT TO MOLISA AND REALTED ISSUES
The Ministry of Labour – Invalids and Social Affairs, now, is competent regarding affairs on colleges including foreign invested institutions. This change also obtains changes regarding licensing procedures and new conditions for operating educational institutions. Firstly, the licenses issued from MOET (former competent authority) now replaced by licenses of the MOLISA by means every foreign invested college needs to apply again to obtain operating licenses. This is an unnecessary step due to similarity of application procedure on MOLISA licenses to the already obtained procedure with the MOET and because of huge bureaucratic burdens coming with the new needed application. Especially for new applicants, the documentation requirements should be reduced due to their not given necessity. In addition, the MOLISA license has new content and conditions making establishing institutions more difficult like the obligation to seek approval regarding the estimated number of students for the coming year – a condition hard to predict.
Further, the General Directorate of Vocational Training currently is not accepting applications for the MOLISA licenses due to the review process of Decree 48 as the regulative benchmark of foreign invested colleges. This is an unacceptable state and leads to uncertainty of international investors and to gridlock of competition. This must change as soon as possible to finalize the conversion process.
- OUTLOOK ON MAJOR TRADE AGREEMENTS TPP 11 AND EUVNFTA
In January 2017, US President Donald Trump decided to withdraw from the US’ participation in the TPP. In November 2017, the remaining TPP members met at the APEC meetings and concluded about pushing forward the now called CPTPP (TPP 11) without the USA. The agreement shall be signed by all member states by the first quarter of 2018. After that, it has to be ratified in each member state before taking effect.
The TPP 11 is targeting to eliminate tariff lines and custom duties among member states on certain goods and commodities to 100%. This will make the Vietnamese market more attractive bringing more foreign direct investment to Vietnam and to the education sector as well.
One another notable major trade agreement is the EUVNFTA between the European Union and Vietnam. The EUVNFTA offers great opportunity to access new markets for both, the EU and Vietnam. It will help to bring more capital into Vietnam. In addition, the EUVNFTA will boost the most economic sectors in Vietnam. There will be come more FDI to Vietnam from European countries which can be used in the education sector on improving Vietnam’s workforce quality leading to better productivity and to be competitive internationally. Well-educated workforce will boost the economy as a whole and is the base of overall growth of a country.
Furthermore, the Investor State Dispute Settlement (ISDS) will ensure highest standards of legal certainty and enforceability and protection for investors. We alert investors to make use of these standards! We can advise how to best do that! It is going to be applied under the TPP 11 and the EUVNFTA. Under that provision, for investment related disputes, the investors have the right to bring claims to the host country by means of international arbitration. The arbitration proceedings shall be made public as a matter of transparency in conflict cases. In relation to the TPP, the scope of the ISDS was reduced by removing references to “investment agreements” and “investment authorization” as result of the discussion about the TPP’s future on the APEC meetings on 10th and 11th November 2017.
Further securities come with the Government Procurement Agreement (GPA), which is going to be part of the TPP 11 and the EUVNFTA.
The GPA in both agreements, mainly deals with the requirement to treat bidders or domestic bidders with investment capital and Vietnamese bidders equally when a government buys goods or requests for a service worth over the specified threshold. Vietnam undertakes to timely publish information on tender, allow sufficient time for bidders to prepare for and submit bids, maintain confidentiality of tenders. The GPA in both agreements also requires its Parties assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation, create an effective regime for complaints and settling disputes, etc.
This instrument will ensure a fair competition and projects of quality and efficient developing processes.
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If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under [email protected] . Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
Thank you very much!
